Remember When?

As the vague outlines of President Bush's Social Security privatization plan rise up in the mist ahead of us, a question naturally comes to mind: What did Democrats do the last time a conservative Republican president proposed massive changes to Social Security? That is, how did they fight back against Ronald Reagan in the early 1980s?

The answer, though, is sadly unhelpful. The Social Security debate of 1981-83 shows only one thing: The world sure was different back then.

The Reagan story starts off somewhat similarly to the George W. Bush story: A president declares a crisis and proposes to solve it. From there the story diverges. First, Reagan had already learned -- from the 1964 Goldwater campaign -- that privatization was a losing issue. Second, the crisis was real. Social Security had expanded too rapidly in the 1970s and inflation was choking it; the day of reckoning that today is loosely projected to be perhaps 40 years off was then quite certain, and barely a year remained.

Like Bush, Reagan put the project in the hands of ideologues who didn't understand the program. Their package of 10 reforms included one that would have reduced benefits for those retiring at 62 to 55 percent of the full benefit, making early retirement virtually impossible. Tip O'Neill called the proposed cut “despicable” and “a rotten thing to do.”

(Interestingly, a much smaller increase in the penalty for early retirement, or an increase in the early retirement age to 63 or 64, would be one of the fairer ways to shore up Social Security's finances today, and has been suggested by TAP's Matthew Yglesias. It would cause less hardship for workers in physically demanding jobs than raising the main retirement age, and the fact that 70 percent of Social Security recipients now retire early shows that these incentives may be off.)

The war lasted exactly eight days. The Democratic House passed a resolution calling the plan “an unconscionable breach of faith with the first generation of workers that has contributed to Social Security for their whole lives.” The same day the Senate voted 96 to 0 that “Congress shall not precipitously and unfairly penalize early retirees.” That resolution was introduced by Republican Senator Bob Dole.

Reagan retreated completely, and at the end of that year appointed a commission made up of eight Republicans and seven Democrats. As one history of Social Security comments, “What better time to be bipartisan than when there is unpopular work to be done.”

The eight-day Social Security war was the most complete debacle of the Reagan years. The aphorism that Social Security is the “third rail” of American politics originated in this period. Republicans blamed it for some of their losses in the 1982 congressional election, although there were other causes. And yet Reagan took his loss, moved on to the most successful period of his or any recent presidency, and it is scarcely mentioned in the retrospectives of his legacy.

The commission -- which increased payroll taxes, built up the Social Security Trust Fund, began the overdue taxation of benefits for better-off retirees, and brought millions of public employees into the system -- was one of the great success stories of modern politics. Chaired by Alan Greenspan, its members were uniformly serious and nonideological: Senators Dole, Daniel Patrick Moynihan, and John Heinz; Representatives Claude Pepper and Barber Conable (soon to be president of the World Bank); and former Commissioner of Social Security Robert M. Ball, who served under three presidents and, along with the more conservative Robert J. Myers, the staff director of the commission, was one of the “two Bobs,” legendary public servants whose careers span the history of the program.

There are a lot of commissions, and the majority fail to produce the bipartisan consensus that is hoped for, but the Greenspan commission was probably the most successful in history until last year's September 11 commission. Both sides knew the political potency of Social Security, but they also understood the problem. Both parties also knew that they could at any time defect and play the issue for political gain, yet both chose not to.

Let's count the ways in which this differs from today. First, while the Reagan White House was technically and politically careless in its proposal, its attempt to solve the problem as it actually existed was unquestionably serious. Having learned in 1964 that privatizing Social Security was an unpopular idea, it would not have occurred to Reagan to try to sneak privatization through under the cover of a crisis, even a crisis he did not have to invent.

Second, members of the president's own party felt no obligation to “walk the plank,” as one member was recently quoted. While Bush faces the prospect of losing because a few Republicans defect, Reagan watched all of them defect from his first plan.

Third, given the magnitude of the initial political mistake, the penalty for failure was not that high. Today we are accustomed to the concept that “defeat breeds defeat,” as Ryan Lizza put it in The New Republic, and that presidential success compounds success. The idea that presidential power depends on an unbroken string of victories is fairly new, dating from the Clinton era. And, of course, the belief that defeat is fatal reinforces the mindless party discipline. When Republicans are told to walk the plank, the best argument they are given is that a defeat will derail Bush's ability to achieve any other goals.

That makes the stakes very high for both Bush and his opponents. It makes the fight inherently partisan, and makes it very difficult to back down as Reagan did.

Fourth, this was largely an insiders' fight. There was no Republican message document such as the one recently leaked from a congressional retreat, no “Harry and Louise” ads, no ridiculous wordplay or attempt to force the press to adopt “personalization” or “modernization.” While groups such as AARP and the AFL-CIO quickly lined up in opposition, they did not even have time to mobilize their members. This, too, made it easier for the Reagan administration to back down.

Finally, there is the purely speculative question: Would something like the Greenspan commission be possible today? It's hard to imagine Bush agreeing to a completely bipartisan commission unless he could stack it with Democrats who were reliably loyal. The “commission” that Bush named in 2001 did nothing but put out option papers prepared by current or former Cato Institute staff, and to avoid public disagreement, was not even asked to endorse an option. The dying Moynihan, we have recently learned, was used as window dressing, his attempt to propose a fourth option suppressed. Given that history, there is little reason to think that the elegant escape route that Reagan found, one that actually secured Social Security for at least 60 years, would be an option that Bush could appreciate.

In addition to considering how to turn back this assault on Social Security, Democrats need to understand this as another example of the case for reform of the political process, to rediscover the strengths that we now look back on nostalgically in the Reagan era.

Mark Schmitt is a senior fellow at the New America Foundation and was formerly director of policy at the Open Society Institute. He writes a blog on policy and politics, The Decembrist.

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